Thompson v. Breeding: Negligence Claims against Brokerage Rejected

A federal court has considered whether a real estate brokerage which auctioned a property could be liable for personal injuries suffered by auction winner while visiting the property.

Avis Thompson ("Buyer") contacted James Knifley ("Knifley") of Jimmie Knifley Realty Company ("Brokerage") about her interest in purchasing a home in Campbellsville, Kentucky. Knifley showed the Buyer a number of properties in the area, including a home owned by Tommy and Elizabeth Breeding ("Sellers"). Knifley told the Buyer that the Brokerage would be conducting an auction for this property. The Buyer attended the auction, and was the prevailing bidder.

Following the auction, the Sellers gave the Buyer a garage door opener so she could access the house to measure the rooms. The Buyer arrived at the home and found that the garage door was already open. She walked around a "large wet and slimy patch" in the center of the garage. She then noticed three men who she believed were in the process of robbing the house. She moved quickly through the garage to confront the men. The Buyer allegedly then slipped on the wet spot in the garage, allegedly suffering personal injuries.

Ultimately, the Buyer did not complete her purchase of the property, as she argued that a subsequent storm damaged trees on the property and reduced the value of the property. Another auction was held, and the winning bid at the second auction was approximately 10% greater than the Buyer's winning bid in the first auction. The Buyer brought a lawsuit against the Knifley, the Brokerage, and the Sellers, alleging violations of Kentucky's license laws for auctioneers as well as negligence and breach of contract. The trial court ruled against the Buyer on all of her allegations. The Buyer entered a settlement with the Sellers, but appealed the negligence claims and alleged license law violations against the Brokerage.

The United States Court of Appeals for the Sixth Circuit affirmed the ruling of the trial court. The court looked at the negligence allegations made against the Brokerage. The trial court had ruled in favor of the Brokerage because the Buyer's own testimony showed the wet spot was an "open and obvious" hazard on the property, thereby eliminating any duty for the Brokerage to protect the Buyer from the hazard. The court agreed with the trial court's ruling, rejecting the Buyer's claims that somehow her being distracted by the perceived thieves supported her negligence claims. Additionally, the court stated that the negligence claims would also fail because the Brokerage was not in control of the property at the time of the alleged fall. The court stated that a person or entity cannot be liable for injuries when the person has neither title nor possession of the premises at the time of the injury.

Next, the court considered the Buyer's auction license law violations. The Buyer argued that she could bring a lawsuit against the Brokerage for its alleged violations of the auction license law, including sections which concerned honesty and competency. The court affirmed the lower court's rulings that there were no private rights of action for violations of these sections. The only remedy which exists for violations of these sections is to make a complaint with the state's Board of Auctioneers, who have the discretion to award damages to the complaining party if it finds violations of the state's laws. Therefore, the court affirmed the rulings of the lower court.